Wadiá and Mudarabah (Investment) Deposits

Wadiá Deposits

These accounts govern what is known as Al-wadiá principles. These deposits are payable on demand without a notice being given to the Bank. The bank guarantees full return of these deposits on demand.  For the depositors to give the Bank permission to use the fund, the bank shall use these funds in permissible business operations at its own risk. Since all risk is borne by the Bank, the depositors are not entitled to any share in profits earned by the Bank.

Abay Sadiiq offers the following two deposit products under this category:

  1. Wadiá savings
  2. Wadiá current

Mudarabah (Investment) Deposit

Investment deposits are the Islamic banks’ counterpart of fixed time deposits in the conventional system. They are also called profit-and-loss sharing (PLS) or participatory accounts. These accounts could be opened either by individuals or companies for any specified period such as six months, one year or even longer. The depositors do not receive any interest. Instead, they are entitled for a share in actual profit accrued from the investment operations of the bank. The profits are shared by the depositors according to their amounts and the period they are held by the bank in an agreed proportion. As an accounting practice, the amount held in the account is multiplied with the period for which it has been employed. The profits are distributed on a pro rata basis on this product. Usually withdrawals are not allowed from the investment accounts except under special circumstances for which some notice period is required. The depositor will have to forego his share of profit for the withdrawn amount.

In this category we have two investment deposit products

  1. Mudarabah saving account
  2. Mudarabah term deposit account